- Sustainable Economic Systems
- To put out Indonesias forest fires in 2016, follow the moneyand cut it off.
To put out Indonesias forest fires in 2016, follow the moneyand cut it off.
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Today, an international coalition of over 70 organizations launched a call on financial regulators in Indonesia, Malaysia, Singapore, Japan, China, Europe and the United States to apply emergency sanctions on major commercial banks, to stop financing companies that are known to contribute to the massive forest fires that annually choke much of Southeast Asia.
The demand went out to dozens of bank CEO’s and financial regulators in Asia, Europe and the United States, in a letter signed by numerous member groups of Walhi/Friends of the Earth Indonesia, Transformasi untuk Keadilan Indonesia, Rainforest Action Network, the Sierra Club and dozens of others as well as Friends of the Earth U.S.
As the letter to the financial institutions states:
“The fires and resultant haze that choked Southeast Asia in 2015 caused an unprecedented environmental disaster, public health crisis for millions of people, and cost Indonesia’s economy more than US $16 billion. New fire incidents are being reported in Indonesia and Malaysia as the 2016 burning season begins.
Commercial banks from Indonesia, Malaysia, Singapore, Japan, China, Europe and the United States are some of the major sources of capital fueling the expansion of the industrial palm oil and pulp and paper sectors in Southeast Asia, and the fire outbreak associated with them. Banks should not be supporting clients or their wider group of companies violating anti-fire laws, however they continue to do so.
As institutions enabling, and profiting from, the illegal actions of clients, these banks are directly linked to and share responsibility for the harmful and illegal impacts of their clients. In the absence of adequate controls and safeguards imposed by banks themselves, financial regulators must step in and correct these systemic failures in the financial system.”
Last December, Friends of the Earth put out a short video linked to our report Up in Smoke, that examines a few of the plantations in Central Kalimantan, Indonesia, where fires broke out during the 2015 fire season related to the massive re-engineering that has transformed peatland ecosystems into vast oil palm plantations. This report names two companies, Wilmar International and Bumitama Agri Ltd., within whose plantations fire had broken out during 2015. But these are just a small fraction of the 413 companies cited in today’s letter to banks that have known links to Indonesia’s fire crisis last year. As the letter points out, these companies received financial services and investment from more than 20 commercial banks, estimated to be in excess of US $17 billion since 2009.
In the United States, the leading financiers of the palm oil sector are by and large not the big banks, but equity investors – large asset managers and pension funds who have hundreds of millions invested in some of the most unsavory palm oil companies out there. Among them are CalPERS, with $106.90 million in palm oil through at least eight companies; Dimensional Fund Advisors, with $369.26 million through at least 14 companies; the Vanguard Group, with $2.88 billion through at least twelve companies; and TIAA-CREF, with $433.65 million in palm oil through at least nine companies.
Currently, there are no laws on the books in the U.S. that prevent these financiers from investing in companies that destroy forests, wipe out endangered species and grab land from local communities.
Hence, the demands of today’s letter to financial regulators to apply sanctions that suspend financial services to any companies identified as causing haze or fire; to require compulsory standards and procedures for financial institutions with clients in the tropical forest-risk sectors; and to order Stock Exchanges to suspend companies engaged in irresponsible business practices.
Simply put, when you follow the money and find forests on fire, a major contributor to putting out the fires is to cut off the money.
To read and support the letter to banks, find it posted by the Rainforest Action Network, here.